German budget surplus highest since 1990

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Higher consumer spending has helped to boost growth in the economy

Germany’s budget surplus hit a post-reunification high of nearly 24bn euros (£20bn) in 2016 boosted by a higher tax take and increased employment.

This is the third year running that German government revenue has outstripped expenditure.

However, there was an increase in spending on housing and integrating refugees.

Under budget law, some of the surplus money will go into a fund to support the refugees.

Separately, official figures confirmed the economy grew by 1.9% last year, mainly because of higher spending by consumers and government.

High employment

The budget figures, published by Germany’s Federal Statistical Office, showed that income was higher than spending in all areas of government – federal, state and local government, as well as social security.

The office said the main factors improving revenues were the large increase in income tax and property tax payments as well as the “good employment situation”, which led to a “considerable growth” in social contributions.

In terms of expenditure, a big factor was increased spending by state and local governments on things such as accommodation for refugees, as well as payments to them for living expenses.

Germany has taken in more than a million migrants over the past two years, mainly from Africa and the Middle East.

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This jobs fair in Berlin is an example of German efforts to integrate migrants

Too strong

On Wednesday the Commission said Germany’s current account surplus – which measures the balance of goods, services and investments into and out of the country – was too big.

It said that cutting that surplus would help the whole of the eurozone.

It also said Germans were saving too much and not investing enough in both the private and public sector.

The Commission acknowledged that steps had been taken to reverse that situation, but more could be done.

To address the economic “imbalances” the Commission said: “Further policy action should aim at further strengthening investment, including by reforming the services sector and improving the efficiency of the tax system, as well as stimulating labour market activity of second earners, low-income earners and older workers to boost households’ incomes and counter the effects of ageing.”